As professional property managers, we like to keep track of the local real estate market. Why? Our owner clients are heavily invested in Birmingham-area real estate, and as owners have a vested interest in monitoring trends and conditions. One major trend as of late has been a gradual shift from a buyers’ market to one in balance. The metro area has been in a buyers’ market for some time, ever since the recession hit. We evaluate this based on total months of supply, or, how long it would take for the market to run out of available homes if sales continue at today’s rate, without any additional new listings. A six-month supply indicates a balanced market, favoring neither buyer nor seller, and that is exactly where Birmingham is, according to stats provided by the Alabama Center for Real Estate (ACRE). ACRE also indicated in its report for the month of May that sales increased by nine percent from April, roughly in line with the monthly increase from April to May that we usually see. This suggests strong demand in the area for homes. As demand has increased, so have home prices. The area’s median sales price stood at $173,700 in May, up 0.5 percent from May 2013 and 8.6 percent from April 2014. Of course, this doesn’t mean that every neighborhood has seen a price increase, even in the long run, but most have. Finally, there were 1,236 residential sales in May, which fell by 1.5 percent from last May. Staying above the 1,000-home mark, though, is good for the market’s health as a whole. What does all of this mean for property management and the rental market? Falling supply – as indicated by the total months of supply – indicates that we’re on the way to not having enough homes for those who want to buy them. In absence of adequate supply, rental vacancies should go down. As prices continue to increase, we’ll also see more downward pressure on rental vacancies, as more people will see renting as the less-expensive option. Contact us for more information on the Birmingham market and how you can take advantage of it.
Matthew is the CEO of Evernest. He is a student of the book Good to Great and is passionate about building the best property management company on the planet (and maybe even the universe if Elon Musk will hurry up). You can usually find Matthew at the baseball field with his son, at a dance recital with his daughter, or at his favorite restaurant with his wife, when he’s not in the office. And if you can’t find him in any of those places, it probably means he’s traveling.